4.4 million set to pay tax to HMRC for 'first time' after being 'dragged in'

The number of UK income tax payers has risen by 4.4m in three years due to threshold freeze. HMRC data shows 26 per cent more people over state pension age paying tax on earnings than in 2021 to 2022 - in a brutal Cost of Living blow.

Rachael Griffin, tax and financial planning expert at the wealth management firm Quilter, said: “This morning’s statistics from HMRC reveal the continued impact of the Conservative government’s stealth tax agenda, as the number of people being pulled into the higher and additional rate tax brackets has continued to soar as a result of frozen tax thresholds and the ongoing impact of fiscal drag.”

Sarah Coles, head of personal finance at the investment firm Hargreaves Lansdown, said: “The agonising pain inflicted by fiscal drag and cuts to dividend allowances has been laid bare, with millions more people paying tax, and billions of pounds more being raked in.”

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Former pensions minister Steve Webb said the data showed the frozen tax thresholds, combined with significant increases in the state pension, meant the number of pensioners paying tax had “continued to soar”. “For a pensioner in Britain, being an income tax payer is now the norm rather than the exception,” he said.

The figures show that a continuing freeze on income tax thresholds, seen as a stealth tax by some, has pulled an extra 1.77 million pensioners into the income tax bracket. HMRC stats show that in 2024 to 2025 there are an estimated 37.4 million income tax payers.

Those figures are up from 33 million when personal income tax thresholds were frozen in the 2021 to 2022 tax year. That includes 8.5 million taxpayers above state pension age, 26% more than the figure of 6.7 million recorded in 2021 to 22 tax year, HMRC also states.